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LONDON – The dollar lurked below recent highs on Tuesday as traders awaited this week’s key U.S. inflation print for any signs that price pressures are finally abating and that the need for further aggressive U.S. interest rate hikes is easing.

Unexpectedly strong US jobs data on Friday had boosted the greenback, which posted its biggest daily percentage gain since mid-June against the yen that day as investors ramped up bets on a 75 basis point (bps) rate rise in September.

But the currency has pulled back since then as focus shifted to Wednesday’s July consumer price index (CPI).

The dollar index , which measures the currency’s value against a basket of other peers, was marginally lower at 106.23. It held below a more than one-week peak hit on Friday at 106.93.

Sterling was little changed at around US$1,2055 and the euro was 0,2 percent firmer at US$1.0213. The dollar was also flat around 134.90 yen .

“I’m a bit concerned about inflation tomorrow. The market has been wrong-footed all year and if we get a strong core inflation print that will nail expectations for a 75 bps rate hike in September,” said Kenneth Broux, a currency strategist at Societe Generale in London.

“It’s too soon to say it’s time to short the dollar as the Fed may have to do more.”

The U.S. Federal Reserve hiked rates by a hefty 75 bps in June and July. Money-market futures show traders see about a two-thirds chance of a 75 bps hike next month and have started pushing expectations for rate cuts deeper into 2023.